Hedgeye - WYN Q2 2014 - EARNINGS PREP

Consensus estimates, management guidance and commentary, and questions for management in preparation for the earnings release/call tomorrow

Q2 2014 CONSENSUS ESTIMATES

MANAGEMENT GUIDANCE

Q2 2014:

Adjusted EPS: $1.11 to $1.13
No share repurchases factored into guidance
During the period April 1, 2014 through April 23, 2014, WYN repurchased an additional 0.6 million shares at an average price of $71.98 for a cost of $42 million.

Full Year 2014:

As of March 31, 2014

QUESTIONS FOR MANAGEMENT

How much capital does WYN have "stuck" in Venezuela due to the Porlamar, New Sparta? How does the company plan to deal with this "at risk" capital?
Discuss peak season summer vacation bookings (trends - occupancy and rate) and cancellation rates.
Discuss how the recent national umbrella television advertising campaign has increased consumer awareness and how that awareness translated into room reservations. How will the company change the targeting of the advertisement between now and Sept 21?
Discuss current M&A pipeline and pricing vs. return expectations
View on increasing dividend as compared to growth in free cash flow
With the WYN stock trading near $73/share, what is managements view on stock valuation?
Discuss recent credit trends within Vacation Ownership segment - receivables write-downs, reserves, and impairments?
How has the vacation ownership podium presentation format impacted sales trends?
Plans for an additional time-share receivables securitization during 2014?

FORWARD LOOKING COMMENTARY

Lodging Segment

The general economic environment in Europe is improving and the operating enhancements that Wyndham put in place (namely technology) will enhance yield management capabilities and streamline cost structures.
Anticipate margin improvement in our hotel group.
Hotel Group will see first ever umbrella marketing program with a national advertising campaign in spring 2014.

Vacation Exchange & Rentals

As of early April, peak summer bookings for Wyndham's European vacation rental businesses were comfortably ahead of last year - more volume than it was pricing - up high single-digits.
(Guests) are booking earlier.
A decline in exchange revenue per member, primarily resulting from the decline in Latin America due largely to the ongoing economic and political environment impacting Venezuela customer base, where access to foreign currency is limiting travel.
Summer is looking good. Visibility into that (booking trends) is difficult due to a shorter booking window.
Largest European rental market is Holland, and the Dutch consumer's feeling much more confident than he and she were two years ago, and even more than last year.
Seeing some positive trending in consumer confidence in Europe and see this in the advance bookings.
(Goldman Conference) Advance bookings have been up, strong single-digit, low double-digit growth in different pockets of the market so call it 10% booking improvement. As the yield management systems kick in, expect ability to push price closer to the time of travel.

Vacation Ownership

Targeting just over 30,000 new customers this year versus about 27,000-28,000 last year
Conditions in the ABS market are terrific
The amount of loans written off were $63 million in the quarter compared to $77 million in the first quarter of last year.

Corporate

In the first quarter, repurchased 2.1 million shares totaling $150 million. Absent M&A opportunities, it's safe to assume that Wyndham will spend approximately $600 million this year on share repurchase.
Repurchase authorization of $476 million remains
Increased EPS guidance by $0.05 for the full year and diluted share count goes to 130 million shares reflecting the benefit of repurchases.
VAT impact in Q1 was $3 million or $4 million.
Foreign exchange negatively impacted quarterly results by $6 million due to the official exchange rate of Venezuela.